Sunday, September 25, 2022 Sep 25, 2022
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Local News

Psst! Wanna Buy A Media Company Cheap?

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The market (that in capitalist theory it is supposed to be “rational”) is mostly composed of lemmings. Look at some local media stocks, and you’ll see it. Our friends at A.H. Belo, for example: They own three major newspapers with revenues of about $550 million and net cash flow of around $93 million. Yet the market values the company’s total worth at around $122 million. (I bet their downtown real estate is worth that.) Or Idearc, the yellow pages spinoff from Verizon. Its revenues are $3.1 billion (with a “b”). Free cash flow is $257 million. Yet the market values it at around $256 million. If you and I borrowed $256 million today, bought the company, paid off our loan, we’d be left with cash in our pocket of $1million, and next year we’d have that $257 million in cash flow all to ourselves. Nice! More than nice! Let’s do it!